The path to climate cooperation

Thursday, 30 August 2018 08:42 GMT

German President Frank-Walter Steinmeier, COP23 President Prime Minister Frank Bainimarama of Fiji, U.N. Secretary-General Antonio Guterres, Patricia Espinosa, Executive Secretary of the United Nations Framework Convention on Climate Change, pose for a family photo during COP23 U.N. Climate Change Conference in Bonn, Germany, November 15, 2017. REUTERS/Wolfgang Rattay

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The hardest climate problem is not CO2, or fossil fuels, or rising seas. The hard nut to crack is getting people to cooperate

Climate change is fundamentally a cooperation problem.

But after 25 years of failure, climate negotiations still use an ineffective pledge-and-review approach. Countries pledge almost anything, subject to unenforced review. This approach ignores everything we know about how to promote cooperation.

Fixing the climate may be the toughest cooperation problem ever faced by humanity. Every country wishes the others would solve the problem for them, and many try to get a free ride. So the Paris agreement is weak and calls for repeated reviews to “increase ambition.” Will this work? A large body of science, including hundreds of laboratory experiments and field studies, says it won’t. Paris negotiators didn’t reject this science. They just didn’t discuss it.

There is only one successful approach to cooperation: reciprocal agreements — “I will if you will.” The other approach, pledge and review, is just a practical-sounding euphemism for what might be called contagious altruism. Here’s how it unfolds in hundreds of experiments.

A typical experiment might have 10 players. If they all cooperate they win big (think: save the planet). But if all cooperate but one, that one wins even bigger, because the others pretty much “save the planet,” and the one gets a free ride. In the actual experiment, each player can contribute $10 to the “pot,” then the experimenter (nature) doubles what’s in the pot and divides it (the improved climate) equally among all — no matter who didn’t contribute.

If each contributes $10, all of that is doubled and each gets $20 back. The payback from saving the climate is greater than the cost. But if one does not contribute, that one (and everyone) will get $18 back because the pot is slightly smaller. But $18 combined with the $10 he didn’t contribute, makes him the big winner.

This game is sort of like pledge and no review. Some pledge $10 to look good, but some free-ride, and the game is over. That’s why Paris adds the review, where everyone gets to see others’ actual contributions. If altruism is contagious, the cheaters will turn to altruism in the next round. And the world is saved.

In the experiment’s first round, some cooperate, while others free-ride — just like in Paris. But here’s the dreadful news. What almost all experiments and studies show is that without an “I will if you will” agreement, cheating is more contagious than altruism. Seeing others cheat makes people cooperate less while they wait for others to improve. The result is a downward spiral toward minimal cooperation, like what happened with the Kyoto protocol.

Now here’s the good news. Nobel Prize winner Elinor Ostrom studied hundreds of real-world situations where moderate sized groups needed to cooperate but had no government to enforce cooperation. This is much like the 200 countries of the world that have no world government to enforce a reciprocal agreement. She found these groups often succeeded.

When they did, they always used a reciprocal common agreement that said, “I will if you will.” The rules must be the same for all, but they can be subtle. For example, contributions could depend on wealth or CO2 emissions.

The Kyoto negotiators knew they needed a reciprocal common agreement. But after a year of searching and a dozen dead-end proposals, they gave up and let everyone pledge whatever they wanted. Their mistake was to rule out from the start an agreement based on a common price for carbon.

Crucially, that’s the only commitment that requires a similar effort by all parties.

A carbon price also allows nations to choose cap-and-trade, carbon taxes or hybrid schemes. It’s the cheapest way to reduce emissions. And it generates revenue that can used to fight poverty, develop infrastructure, reduce other taxes and so on.

The hardest climate problem is not CO2, or fossil fuels, or rising seas. The hard nut to crack is getting people to cooperate. Solve the cooperation problem and the rest will follow. It’s about time to open our eyes and look at the one science that matters most. The science of human cooperation.

 

Peter Cramton and Axel Ockenfels are economists from the University of Cologne, Germany. Steven Stoft is an economist in Berkeley, USA. Their research on the design of climate negotiations is elaborated in a book with David JC MacKay on Global Carbon Pricing.